Allister Sparks made some interesting observations in BusinessDay last week:
Last week, all four of SA’s big banks closed Oakbay’s accounts, KPMG announced it would no longer audit the company’s books, and the family’s stock exchange sponsor abandoned them.
This was followed by Atul and Varun Gupta resigning their directorships of Oakbay, and Duduzane Zuma, the president’s son, from his nonexecutive chairmanship of Shiva Uranium, an Oakbay subsidiary.
There is something fishy going on here. The critical thing is that Oakbay, and particularly Shiva, a uranium mine in the North West, is central to Zuma’s eagerness to do a deal with Russia to build and operate a series of nuclear plants capable of providing Eskom with 9,600MW of electricity.
It is a deal that would make both the Guptas and the Zuma family a fortune, since Duduzane Zuma owns a sizeable slice of Shiva’s shares.
But it is a deal two finance ministers, Pravin Gordhan and Nhlanhla Nene, have blocked because they deemed it unaffordable.
Sparks goes on to allege that it was Nene's resistance to the nuclear deal prompted his sacking, directly contributing to South Africa's current political crisis.
It is interesting to note that a few hours before firing Nene on that critical night, Zuma had persuaded the Cabinet to approve the 9,600MW deal — in itself an illustration of how he has packed his administration with toadies. He must have been furious when Nene refused to okay it, thus obstructing his grand plan.
I have always thought that investing in nuclear power was the worst idea ever for South Africa's power sector. There is not a single nuclear power plant in the world that has ever been cost effective. Adjusted for government incentives, research and development and waste disposal, nuclear is way more expensive than large-scale solar or wind power, not to speak of hydro, all of which have substantial potential in South Africa and the wider region.
Is now the time for Vesuvius of Zupta scandals to erupt? via Martin Plaut
In this podcast, we are joined by Martin Plaut and Gushwell Brooks to discuss the deplorable state of South African politics.
The adoption takes the (defence) policy a step further towards adoption by Parliament and is a major milestone in ensuring the revitalisation of the country’s armed forces.
I have written about the Defence Review (essentially a whitepaper on the future of South Africa's military) several times in the past. South Africa's National Defence Force really is in a dire state and not at all equipped for the missions it is currently expected to fulfill. Like being part of the U.N.'s Force Intervention Brigade in the DR Congo.
To the best of my knowledge this is not disputed by anybody in South African politics. What I'm missing from the debate around the Defence Review so far is a discussion about how South Africa wants to use its military in the future. The Defence Review gives several possible scenarios but these cover only the operational capabilities of the SANDF. So far, South Africa's government has not formulated a convincing military doctrine, e.g. under which circumstances it will be prepared to deploy the military inside or outside its borders.
Source: Defence Review given the thumbs up by Parliamentary review committee | defenceWeb
A report (pdf) launched by the African development bank finds substantial potential for natural gas extraction from shale formations in a number of African countries:
Several African countries have potentially viable shale gas deposits, which, if developed, could lead to lower gas prices, increased consumption of natural gas, reduced greenhouse gas emissions from power generation and substantial economic benefits to producer countries, finds a report launched today by the African Development Bank (AfDB). - Press release
But the report also cautions the countries analysed, including Algeria, Libya, Tunisia, Morocco, Mauritania, South Africa and the Western Sahara that shale gas exploitation is fraught with environmental dangers. From the executive summary:
The production of shale gas by fracking involves a number of environmental risks, and these continue to be of concern to communities near proposed well sites and groups involved with environmental protection. Four key issues have been identified that governments need to take into account in their decision making and regulations for the sector.
I. The large use of water required for fracking - Each well requires a large amount f water (several thousands of cubic meters, which has to be either taken from local water sources or trucked in. […]
II. Water contamination - The chemicals added to the fracturing fluid may escape and pollute water supplies. This can happen at the surface, where better containment can be mandated, or underground through leaks into aquifers, […]
With all of the countries assessed in the report being largely arid (South Africa's largest shale gas potential is in the Karoo desert) and already confronted with water crises, this is a major issue.
III. Seismic events […]
IV. Venting and flaring of gas - […] The global warming potential of vented gas is so high that allowing a substantial fraction of the produced gas to be vented would raise the total life-cycle emissions of the gas toward those of coal, […]
The AfDB advises prospective producers to use available regulatory tools to minimize environmental risks. Environmental organisations argue that until now the potential environmental harm that shale gas exploitation could cause is not understood very well and that countries should refrain from tapping their reserves of this unconventional resource because of this. But with the report attesting several African countries potential reserves on "game-changer" scale, appetites will likely overcome caution.
What is your take on the report? What weights greater - environmental concerns or potential profits?
As always, the best reads from around the 'net:
Zambian copper project results in many disputes
An excellent article looks at the many controversies surrounding the Sentinel copper project in Zambia. Owner First Quantum Minerals is embroiled in land disputes, competing interpretation of mining and compensation law, as well as a governmental approach swaying between support and condemnation. Think Africa Press
A rare look at illegal oil refineries in Nigeria
The British Guardian provides insights into illegal refineries in the Niger Delta, where stolen crude oil is converted into Diesel under incredibly dangerous conditions for workers, communities and environment (including video). The Guardian
Detailed look at the future of East African oil
Many issues and challenges mentioned in this piece will sound familiar to observers of the East African oil business, but the article offers a nice and in-depth summary. Voice of America
Angola ends tax exemption of oil companies
The government has gazetted a law that applies consumption tax rates ranging from 5 to 10 per cent on activities of companies working in the oil sector. These were so far completely exempt from the tax that reaches rates of up to 30 per cent on luxury goods. This is Africa | Mining Review
Gold and violence in Darfur
A look at how government-supported gold mining activities contribute to increasing violence and a change of conflict dynamics in Darfur. The Guardian
- Study forecasts continuing stagnation of the South African mining sector: African Mining Brief
- The European Parliament has accepted a new Fishery treaty with Mauritania: Jeune Afrique
- Uganda is looking to import Coal from Mozambique to develop local iron ore reserves: AllAfrica/New Vision
- The European Union has lifted sanctions against Zimbabwe, allowing for diamond exports from its controversial Marange mine to resume: Mining Review
- Thousands of people demonstrated against French mining giant Areva in the town of Arli, Niger: Jeune Afrique
- Mozambique plans to finish its new natural gas legislation at the end of this year: Mining Review
- Namibia plans to start exporting large quantities of cattle on the hoof to neighbour Angola: AllAfrica/New Era
As always, the best links from around the internet:
New policy on natural gas coming soon in Tanzania
The government of Tanzania is on the verge of passing a new national policy on natural gas exploitation. So far the country has no specific official policy in that sector and the new legislation wants to address specifically the issue of local content. AllAfrica/Tanzania Daily News (2)
South Africa aims for new nuclear power plants
The South African government pushes for the construction of new nuclear power plants to increase the generation of nuclear energy from 1,800 MW to 9,600 MW per year by 2030. Key financial decisions are planned to be taken this financial year. South Africa currently runs the only active nuclear power plant on the African continent and pursues a large nuclear capacity under the label of "clean" and indigenous energy. AllAfrica/SouthAfrica.info
Resources in the DR Congo
A detailed look at the trends and challenges of the natural resources sector in the Democratic Republic of the Congo. Ventures Africa
The dangers of the use mercury in gold mining
Mercury is used by the great majority of artisanal gold miners in Africa, numbering millions, but its use results in dramatic health problems. A new international treaty aims to reduce the amount of mercury used, but changing entrenched practices in local communities will be hard. The Economist
Search for oil kills whales off Madagascar
A sonar system, operated by Exxon Mobile to explore oil fields off the Madagascan coast, is the reason for the death of dozens of melon-headed whales. This is the finding of an independent scientific commission. Global Post
Three alternatives for South Sudanese oil
The governments of South Sudan and Kenya are currently planning the establishment of a new pipeline corridor to transfer Sudanese oil to the Indian Sea at Lamu. This article argues that the better alternatives would be to transfer the oil by either rail or road. AllAfrica/Pambazuka News
High hopes for Rwandan mining sector
The Rwandan government wants the country's mining exports to triple by 2017. AllAfrica/Rwanda Focus
Trading concessions with "governments in exile"
Kilimanjaro Capital, a company registered in Belize, is trying to get investors interested in buying shares of oil and gas concessions bought from African governments in exile. These include self-styled authorities from Cabinda (Angola), Biafra (Nigeria) and southern Cameroon. Sufficient to say that the odds of a positive return on these investments are terribly long. Africa Confidential (subscription required)
Chatham House releases report on crude oil theft in Nigeria
A new Africa Programme report examines the international dimensions of Nigerian crude oil theft and explores what the international community could do to tackle the problem. The report assesses the scale of crude oil theft in Nigeria, analyses how stolen crude is exported and highlights the laundering of proceeds through global financial centres.
Chatham House (there is also a video with a discussion of the report available)
The problems of EITI
The blog Why Nations Fail devotes several blog posts to the Extractive Industries Transparency Initiative (EITI) and discusses its shortcomings and opportunities. Post 1, Post 2, Post 3
Liberian government revokes logging permits
17 logging permits for valuable timber were revoked by the Liberian government. These permits have been given out in contradiction with the 2006 law governing these issues, according to the government. AllAfrica
South African mining law draws criticism
The South African government opened the public review process for a proposed mining law that would bring considerable reform to the sector. Especially the private sector has lost no time criticising the law, which in their view would dramatically worsen the investment climate. Parts of the law would give the government the ability to declare certain resources as "strategic", forcing producers to sell them to local businesses at potentially below market prices to allow to develop local industries. The government has shown willingness to revisit some aspects of the law. This is Africa | African Arguments
Nigerian companies strengthen their oil production
The share of total oil production provided by local companies is rising in Nigeria. International companies like Shell are divesting from onshore and shallow water wells and concentrate on deep water blocks, where political and security risks are lower. Mining Review
Regularly, we bring you the best links from around the internet on everything from exciting new resource discoveries to strikes and market developments. Most pieces we link to will include a look at the political angle of the raw news:
Looming strikes in South African gold mines:
The Union ACMU rejects a settlement between two other unions and gold mining companies, demanding better terms for its members. Employers on the other hand claim that any further strikes would be illegal and unprotected. The stage seems to be set for a confrontation: MiningReview.com
Child labor in Tanzanian gold mines:
Child labour is still common in Tanzanian mines, reports ThinkAfricaPress
Vast groundwater reserves discovered in Kenya's Turkana region
Politicians are euphoric, but the remoteness of the reserves and their depth (300 meters) make it unlikely that talk of a "game changer" comes true. More likely are profound positive local consequences: Daily Maverick